EFunds Shares Fall After Downgrade

Friday 6 May 2005 11:59 CET | News

EFunds Shares Drop Sharply After Analyst Lowers Rating, Raises Concerns Over Weak 1Q Results

Shares of eFunds Corp. plunged more than 13 percent in Thursday trading after an analyst raised concerns over weak first-quarter earnings and said the electronic-payment processors core business is deteriorating. A day earlier, Scottsdale, Ariz.-based eFunds said its quarterly profit grew 40 percent to 26 cents per share, while revenue slipped 19 percent due to the sale of its automated-teller machine business in November. But setting aside gains from selling the unit, adjusted earnings would have been 22 cents per share -- missing the average estimate of 23 cents from analysts polled by Thomson Financial, according to Smith Barney Citigroup analyst Tony Wible. The analyst noted that revenue from eFunds core electronic-payment division, which grew 2 percent to $50.8 million, fell well short of his target for 16 percent growth. He added that the current business environment remains difficult, and forecast a continued decline in market share in the companys risk-management segment. We continue to see eFunds as a recovery story, but are becoming more concerned that deterioration of underlying business is offsetting the accretive deployment of cash, Wible wrote in a research note. Wible reduced eFunds to Neutral from Buy and lowered his target price to $25 from $27. Shares of eFunds were down $2.35, or 10.6 percent, to $19.92 in midday trading on the New York Stock Exchange, after falling as low as $19.25 in the morning.

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Categories: Payments & Commerce | Payments General
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